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In Dismissing Homebuyer's Defective Construction Suit Against Contractor for Lack of Privity, Supreme Court of Utah Cautions Future Homebuyers to Obtain Express Assignment of All Available Warranties at Time of Acquiring Home

Tomlinson v. Douglas Knight Constr., Inc., 2017 Utah Lexis 132 (August 29, 2017)

Author: John J. Gazzola

11/09/2017

Read the full post at Constructlaw

In Dismissing Homebuyer's Defective Construction Suit Against Contractor for Lack of Privity, Supreme Court of Utah Cautions Future Homebuyers to Obtain Express Assignment of All Available Warranties at Time of Acquiring Home

This case arises out of the construction of a residential property. Lot 84 Deer Crossing (Lot 84) purchased the property and contracted with Douglas Knight Construction, Inc. (DKC) to build a house on it. The parties’ contract included a one-year construction warranty. Lot 84 then assigned to Outpost Development, Inc. (Outpost) all of its rights in the property and the construction agreement. As the home neared completion, Outpost noticed defects in its construction and, pursuant to the warranty, directed DKC to fix the deficiencies. Despite DKC’s efforts, the defects remained. Outpost then sold the home to Joseph Tomlinson, but did not assign to Tomlinson its interests in the DKC construction agreement. Tomlinson subsequently noticed defects in the home and filed suit against Outpost and DKC.

Shortly thereafter, Outpost declared bankruptcy and was dismissed from the case. During the bankruptcy proceedings, Tomlinson was assigned an interest in any claims that Outpost had asserted or may assert against DKC. Tomlinson maintained that this assignment encompassed claims for breach of the DKC construction agreement and amended his complaint to include claims for breach of express and implied warranties. Tomlinson sought to assert these claims as an assignee of rights of parties in privity with DKC: first, through the assignment made when Outpost purchased the property from Lot 84, and second, through the assignment in Outpost’s bankruptcy proceedings. The district court rejected these theories and dismissed Tomlinson’s claims, holding that they were barred because Tomlinson had never acquired a direct interest in the DKC construction agreement.